Good morning, and thank you for joining CMPC's second quarter 2026 earnings call. I'm Sebastián Moraga, CFO of CMPC.

Joining me today are Guilherme Viesi, Chief Commercial Officer of Pulp, and Diego Merino, Finance Director Brazil and Head of IR. Before we begin, please refer to the standard note on the forward-looking statements in this presentation.

Before we go into the presentation, I want to share the key highlights of this quarter. The second quarter reflected continued recovery both in pulp and softys, and at the same time, we are facing some challenges that we believe are important to discuss.

Being said that, there are the four takeaways for this quarter I'd like you to keep in mind. First, pulp price recovery took hold.

A 7% sequential increase in hardwood price, together with a 3% reduction in its cash cost, lifted pulp EBITDA 16% quarter-on-quarter to $180 million. This was achieved despite a more demanding environment of higher energy and logistics costs tied to Brent.

Second, Softys confirmed its improvement in results. EBITDA reached $101 million, up 4% versus the previous quarter, showing that our efficiency and cost optimization initiatives continue to capture benefits and help offset the Brent-related cost headwind.

Third, Biopackaging had a more challenging quarter. Sales were up 2%, but EBITDA fell to $15 million on continued boxboard oversupply formation, plus seasonality and one-off costs in corrugated.

As we flagged last quarter, we expect the operational and efficiency initiatives underway to translate into a better scenario toward year-end. On leverage, our net debt to EBITDA reached 4.17 times, and we are very aware that this remains outside our target range.

We expect it to decline progressively over the coming quarters as results and cash generation improve. We continue advancing our asset monetization program to further strengthen the balance sheet.

Preserving a robust capital structure consistent with international investment grade rating remains fundamental for CMPC. On Natureza project, we continue to advance on the enabling conditions.

In June, we obtained the Licença Prévia for the Rio Grande terminal, an important step forward. Now to the headline numbers.

Sales of $1.9 billion were up 5% compared to the first quarter of this year and essentially flat year-on-year. Consolidated EBITDA was $270 million at a 14.1% margin, up 6% versus the first quarter, but down 19% versus the second quarter of last year.

Net income reached $9 million. We will comment details on EBITDA and net income later in the presentation.

Going to the consolidated P&L drivers. On the left, sales of $1.9 billion broken down by business: Pulp at $768 million, Softys at $893 [million], Biopackaging at $251 million.

Versus the first quarter, Pulp was up $37 million, almost entirely on the 7% increase in the average hardwood selling price. Softys added $58 million on the sales recovery in Brazil and Mexico across both tissue and personal care.

Biopackaging was up $4 million on higher folding boxboard volumes. Versus the same quarter of last year, sales were essentially flat.

Softys grew $76 million on higher volume in both personal care and tissue, but that was largely offset by the absence of last year's nonrecurring Caieiras sale, which contributed $71 million to the second quarter of last year sales. Operating cost of $1.2 billion held at a stable ratio at 68% of sales.

Other operating expenses of $349 million sat at 18% of sales. On EBITDA, in the quarter, it increased $15 million quarter-on-quarter.

This was mainly explained by Pulp on higher hardwood pricing and lower fixed costs tied to forest protection. The latter was partially offset by the Brent-driven increase in logistics and selling costs.

Softys added $4 million, and Biopackaging subtracted $8 million on lower folding boxboard EBITDA and corrugated seasonality. Versus the same quarter of last year, consolidated EBITDA was $62 million lower.

The largest single driver in the comparison base, which included the Caieiras sale, a $46 million EBITDA impact in the second quarter of last year that did not repeat. Pulp EBITDA was also down $25 million on higher Brent-related costs, which increased forestry harvesting, transportation, energy, and raw material costs.

This was partially offset by a $19 million improvement in Softys. Net income came at $9 million, down 65% quarter-on-quarter and 89% year-on-year.

Compared to last quarter, despite the $15 million EBITDA improvement, net income was pressured by foreign exchange losses in reais and Mexican-denominated liabilities as both currencies appreciated; a lower price level restatement benefit given a smaller hyperinflation adjustment in Argentina. Year-on-year, the decline mainly reflects the lower EBITDA and the FX losses on the Brazilian and Mexican-denominated liabilities, partially offset by a $25 million income tax benefit this quarter versus a $10 million expense on the same quarter of 2025.

CapEx came in at $170 million, down $15 million sequentially and down $157 million year-on-year. The year-on-year decline reflects the Falcom acquisition that was part of 2Q 2025's base.

We had no inorganic growth spent this quarter, consistent with the capital discipline we are applying given our current leverage. Now, I'd like to turn the presentation over to Diego, who will provide more details on our results by business.

Thank you, Sebastián, and good morning everyone. On Pulp business, during the second quarter, sales reached $768 million, up 5% versus previous quarter and roughly flat year-on-year.

Hardwood prices averaged $600 per ton, up 7% quarter-on-quarter and 9% year-on-year, while softwood averaged $665 per ton, down 1% sequentially and 9% year-on-year, narrowing the price gap between the two fibers to $65 per ton from $113 last quarter and $117 a year ago. Production totaled 1,083,000 tons, up 10% quarter-over-quarter as hardwood output recovered 13% following the maintenance shutdowns of both Guaíba lines in the first quarter of this year.

Softwood production eased 3% on the scheduled general shutdown at Laja. EBITDA reached $180 million with a margin of 23.4%, increasing 16% quarter-over-quarter while declining 12% year-over-year.

Compared to first quarter of this year, the improvement was primarily driven by a 7% increase in hardwood pulp prices and a 3% reduction in cash cost. These positive effects more than offset a more challenging cost environment as higher energy and logistics expenses linked to increased Brent prices weighed on results.

On a year-over-year basis, EBITDA was lower mainly due to higher Brent prices, which drove up both selling and logistics costs. This also translated into higher forestry harvesting and transportation expenses, as well as increased industrial costs related to energy and other key raw materials.

Hardwood cash cost came in at $254 per ton, down 3% versus previous quarter, mainly the comparison against first quarter of this year's Guaíba shutdown, though wood cost rose on higher Brent prices, higher DMT in Chile, and the Brazilian real's appreciation. Softwood cash cost rose 5% versus the first quarter of this year to $419 per ton, reflecting the Laja downtime and its ramp-up through June.

Next, let's discuss our Softys business. Softys had a favorable quarter, driven mainly by stronger commercial dynamics in Brazil and Mexico, where both tissue and personal care posted higher sales and volumes versus both the prior quarter and last year.

Sales reached $893 million, up 7% quarter-over-quarter and 9% year-on-year, with personal care at $437 million, up 13% versus the first quarter of this year, and tissue at $456 million, up 2% versus first quarter 2026. With personal care, diaper volumes were up 10% sequentially on strong performance in Brazil, Mexico, and Argentina, while feminine care and wipes also contributed to growth.

EBITDA reached $101 million at an 11.3% margin, up 4% sequentially and 24% year-on-year. The sequential improvement was driven by higher personal care sales, a favorable FX effect, and continued gains from our efficiency initiatives.

This was achieved despite an estimated $10 million negative EBITDA impact from higher Brent-related raw material and logistics costs. Year-on-year, the improvement mainly reflects the richer mix towards personal care and the positive FX effect.

Next, let's discuss our Biopackaging business. Biopackaging continued to operate in a challenging environment, particularly in boxboard segment, where continued oversupply formation kept pressuring selling prices across all markets.

We stayed focused on revenue and profitability management, prioritizing margin over volume, and used commercial and mix improvements in sack kraft and corrugated to partially offset that pressure. Sales reached $251 million, up 2% versus previous quarter on higher folding boxboard volumes in Chile and Europe and higher sack kraft exports to Mexico, but down 2% year-on-year on lower folding boxboard prices.

EBITDA fell to $15 million, down 36% versus the first quarter of 2026. Beyond the folding boxboard price pressure, corrugated volumes were affected by the end of the summer fruit season, a plant's maintenance shutdown, and fixed costs related to a fire at the Papeles Cordillera plant.

Thank you very much, Diego. We ended the second quarter with net debt of $5 billion.

Net debt to EBITDA stands at 4.17 times, up from 4.10 times last quarter. As I mentioned earlier, we expect this ratio to decline progressively over the coming quarters, driven mainly by improved results and cash flow generation across our businesses.

As I mentioned, we continue advancing our asset monetization program to further strengthen the balance sheet.

Thank you, Sebastián. Please recall that you're welcome to ask your question just raising your hand in the chat box.

Today we have Francisco Ruiz-Tagle, CEO of CMPC; Sebastián Moraga, CFO; Raimundo Varela, Vice President of Pulp and Boxboard; and Guilherme Viesi, Chief Commercial Officer of Pulp, in the call to answer your questions. First, we will start with Henrique Marques from Goldman Sachs.

Hey, guys. Can you hear me now?

Yes, Henrique.

Awesome. Thank you.

Thank you for the time. Thank you for taking my questions.

I have a couple questions. I think I'll start with the net debt position and asset sale.

I think these are the most pressing ones. Just trying to understand here, is there any target for you to reach in terms of net debt-to-EBITDA before moving ahead with the Natureza project?

If so, would you consider the 100% of the hybrid bond only the part that is classified as debt? Just trying to understand here what exactly is the metric of net debt-to-EBITDA that you would look at considering the project of Natureza.

Also, if you could remind us what the policy for net debt-to-EBITDA is, that would be great. My second question regarding asset sale.

Just trying to understand here, what is the amount targeted for asset sale? Is this a prerequisite for moving ahead with the Natureza project?

Are you considering selling any of your operating assets, or would that be strictly non-core assets? That's it.

Thank you, guys.

I'll take the first question and Francisco, if you agree, you take the second question of Henrique. I'll go with the first question.

Regarding our target, Henrique, it is stated at net financial debt to EBITDA between 2.5 and 3.5 times. As we mentioned in our analysis, today we are very well aware that we are deviated from that metric.

Second question is, how do we account into hybrid bonds? It's only that 4.17 times considers 50% equity contribution, and that's where we end up with this number.

Third is, how are we expecting this to evolve? We commented that we are on the process of monetizing assets.

I can let you know that we are, I would say, confident that the level of indebtedness of CMPC will evolve positively into the range that I just mentioned on the coming quarters. I cannot comment into detail on the advancement of monetization of assets, but I can let you know that we are confident that in the coming quarters we will be able to show that progress.

Thank you, Sebastián. Next in line we have—

Diego, there was the B part of Henrique. I don't know if you want to take it, Francisco, or—

No, it's okay. I have no comment with your answer.

Next in line, we have Tatiane from J.P. Morgan.

Hi, good morning everyone. Can you hear me well?

Yes.

Thank you. Maybe just a follow-up on the previous question when it comes to the level of that.

When it comes to Natureza, I think the project was announced to the market a couple years ago, and we had the CapEx, but a lot has changed since then. With all these moving parts, could we expect to see some new expectation when it comes to the CapEx amount?

We know that there is some inflation in the industry, something that can also impact those numbers. If you are still comfortable with the level, as you mentioned, with the target that you are 2.5 until 3.5 to go ahead with the project, or in periods of investments, it would be comfortable to be above those levels?

Maybe my second question, this is more for maybe Viesi on an update on the pulp industry. We see that today announcements on resale prices, there is a lot of pressure when it comes to the hardwood prices in China, sorry.

Just to understand that overall what you kind of expect for pulp prices for the coming quarters, if you are positive on the expansion for 2027, just an overall view on that. Thank you so much.

Thank you very much for your question. I can take it.

Yes, as you said, we announced this project a couple of years ago, but of course we have been working in detail in all the engineering of this project and all what this really means in general, considering some extra investment in infrastructure. I can say that, of course, we have some inflation in the period.

I'm not seeing any particular deviation compared with what we announced at the beginning of the process, huh? We haven't finished that process, but we feel comfortable with the figures that we have announced in the past.

In connection with your second question about Natureza and the range of our leverage, I would reaffirm what Sebastián said. I can say that this company is a really responsible company in terms of its leverage.

Of course, our target range is between 2.5 and 3.5. We will continue working on that.

We have some processes that we expect to be really at that range, at least close to that range within the next quarters. I cannot tell you that exactly that what will be the point where we will decide about the Natureza.

Tatiane, I'll take the second question regarding market and prices for the future. I think we have to bear in mind we are in summer in the Northern Hemisphere.

Summer typically in China and in Europe tends to be rather quiet. July, August are the quietest of the month.

Although in the second half of August, China tends to come back from their holidays and start picking up momentum. From a demand perspective, I think globally it's okay.

Every market is quite okay with the demand, obviously excluding Middle East, which is at the moment very complex situation. North America has a very good demand.

Europe has a okay demand for the summer expected. China similar.

When it comes to prices, well, I would say the latest news we have been seeing regarding the Indonesian wildfires is likely to impact on the price and cost of wood chips worldwide. I think this issues on wood chips coming from Indonesia is now expanding for 12 months almost.

Started with floods and then some logistics issues. Now we have wildfires.

We had the revocation of some licenses. This contributes to an increase in the cost of wood chips, which in turn contributes to the marginal cost of the pulp production in China, which reflects positively on pulp prices.

We do expect pulp prices to start trending upwards from here on towards the end of this year.

Thank you, guys. If I can just follow up a question on your answer, Viesi.

You mentioned a little bit the impacts that Indonesia is suffering. Do you see any type of impacts on El Niño?

We see some companies preparing inventory for this time of the year. Do you also see any kind of impact, or are you preparing in any way from that as well?

Thank you.

El Niño has impacted a lot of companies, ourselves included. We have a lot of rain in the south of Chile here, where our mills are.

In Rio Grande do Sul in Brazil, we have been affected by that as well. At the moment without any production or sales impact, but it's definitely being a challenge for pulp production companies, and there's a lot of pulp production companies in the Southern Hemisphere.

I would not be surprised if they are impacted.

Thank you so much.

Thank you, Guilherme. Next in line is Matheus Moreira from Bradesco.

Matheus?

Yeah. Thanks, Diego.

Good morning, everyone, and thanks for taking my questions. My first questions on leverage, and sorry to insist on this topic.

You mentioned on the release that you expect leverage to trend down in the coming quarters given expected stronger cash flow from operations. However, we have seen pulp prices declining in recent weeks, while market conditions in both tissue and biopackaging remain fairly challenging.

I'm just wondering, where should we expect this deleverage coming from besides the asset monetization that you guys talked about earlier? Is there any other initiative in place that could bring this leverage down in the near term?

That's my first question. Then my second question, changing a bit gears here in the tissue division.

You delivered a strong quarter in Q2, right, with volumes increasing both on a Q-on-Q and year-over-year basis. I understand that market fundamentals are still very challenging, right?

Have you seen any initial signs of recovery across your geographies? Could you give us a broad overview on what you're seeing here in terms of supply, demand, and pricing for the coming quarters for the division?

If I may squeeze in a very quick third question on the Natureza project. You guys gave an update on the project during the release, right?

You guys had received the preliminary installation license. What are the remaining milestones required before you can submit the project to board approval, and when do you expect that for happening?

Thank you very much.

Matheus, let me take your first question. You're right that we're seeing pulp prices trending a bit down, and how are we expecting to bring down leverage?

I would repeat what we have been posting the last quarter is basically a very strict use of cash, and that translates into working capital initiatives, I would say into revising our CapEx. You already saw that the CapEx of the second quarter is lower than the first, and you could see for the coming quarters that we are going to be strictly very efficient in the use of cash.

That is, obviously, that helps to bring leverage down, okay? There's another question about tissue.

The tissue question, let me tell you that, yeah, regarding the market and the situation of the market where we are participating, I can say that probably we are not seeing big changes compared with the last quarters. In terms of the market, still we are seeing an overcapacity in Brazil in terms of production, probably it is important, probably around 30%, 40% overcapacity in the industry tissue.

Even considering that, as I mentioned, Brazil is one of the main markets for CMPC, even Mexico is another important market as Diego Medina (Finance Director Brazil and Head of IR):

Since we just lost Francisco, let's give him a few seconds. Here we have Francisco back.

Sorry. No, what I was telling that in Brazil and Mexico, main market for CMPC, we haven't seen important changes compared with the last quarter last quarters, but I can tell you that that CMPC has done or Softys has done important efforts in having, very important improvement in cost, operational costs, and logistics costs.

We're still seeing, probably between 30% and 40% industry overcapacity in Brazil, but still, working hard in being a low-cost producer, increase our distribution network to reach new clients, to improve our point of sale execution. I would say working hard in improving that, and we are being successful during the last quarter in doing that.

Mexico probably not too different the situation. Probably the market continues to present a challenging environment because of consumer behavior and macroeconomic uncertainty.

We experienced some pressure, specific pressure in baby diapers where we invested in the past, but still working, on improvement in logistics and cost in that market. We are challenged for that market because of high competition and good competition there, but basically doing an important job internally, huh?

This is one of the reason I'm working really aligned with our people in terms of improving, this business in a kind of a very competitive market. With the decision, we have been working with McKinsey in some of the part of our businesses, and I would say with good plans on that.

In terms of the next question you asked was connected with Natureza and the key milestone and a more specific definition of the project. What I can say is that we're still working in the licensing process, you know.

It took a bit more time compared with what we considered at the beginning because, we had some extra question or extra work to do with indigenous communities in the region, some extra studies that compared with considered at the beginning. It took more time, but I would say the licensing process, the previous license, which is the next step actually, continue, in the process according with the Brazilian law and and FEPAM and FUNAI, who are the main institution behind approving this project from the environmental and social standpoint, they continue with the process even considering that we, of course, there is a federal prosecutor in Rio Grande do Sul that started a civil action asking us to wider, the studies of indigenous impact basically in the whole state, almost the whole state, which is actually not considered by the law.

What the main institution in Brazil, which is FEPAM and FUNAI in that sense, they have continued doing that because they haven't found anything any illegal or incorrect things in our process. We have been really careful, I would say, step by step and working hard in all the steps we need to approve this.

In terms of when, I can tell you that we are for this moment we are living, in a moment that we are working in the process of having these approvals. As we said before, working in our balance sheet and in a monetization process.

We will see probably a second quarter better compared with the last quarter because, we had some instability in production in pulp during the first quarter that affected, in some way our cash. We will see a better second semester for for tissue, a better second semester even considering some reduction in pulp prices, probably will have a better in term of cash flow would be we are expecting better today expecting a better second semester compared with the first half of the year.

I can tell you any specific moment for the approval of the project.

That's very clear with a lot of detail. Thank you very much, Sebastián, Diego, and Francisco.

Thank you, Matheus. Next in line, we have Marcelo Furlan from Itaú.

Marcelo?

Hi, everyone. Good morning.

Can you hear me?

Yes.

Thank you so much, guys. Sorry to insist on the Natureza's related questions.

If I'm not mistaken, when Natureza was announced to the market, the potential project, we had a different perspective, right, for the long-term dynamics for the market pulp industry. Many things has changed since then, especially with this more challenging scenario with integrated and capacity additions in China, and so on and so forth.

Since then, I'd like to understand maybe what is behind CMPC's management regarding being confident that this project should move forward? Do you guys have maybe a more bullish view regarding the long-term market pulp dynamics, or does this project have differentiated cost structure that makes you confident that this project should move?

I would like to understand what is behind for you guys to be optimistic that this project should move within the company.

Thank you for your question. My answer to that is that, as we said before, there are some consideration for approving this project: licensing, the balance sheet, etc.

What we see in the project itself is that CMPC has we believe that we have a very competitive project. It's a project with advantages in costs for, I would say, two aspects.

One is in forest costs. In general, we have a very good growth of forest in the region per hectare per year.

It's an important advantage there, and also logistics costs is very interesting. From the point, what we have in CMPC is a very interesting project.

I would say that's mainly the fundamental for this. Of course, also we have been participating in the pulp market for several, several years.

CMPC is a well-respected company with good connection with customers, and so we see a good potential. This is basically my answer.

Of course, we are totally convinced with the Natureza project considering what I'm mentioning, hm?

On that subject, I can add that, of course, we monitor what's happening in China, no, the increase in integration they have had. However, high-quality pulp will be needed, no?

China is a very large importer of pulp. We think that will continue to happen.

We have mentioned before that China's growth in pulp imports will decrease, but they will continue to grow at a lower rate, but high-quality pulp will be needed in China, no, and in other regions around the world. As Francisco mentioned, if you have a very competitive project, no, and you think that the market will continue to grow, as a whole, the market, we think, will continue to grow the same than before.

China will grow less, but other regions will compensate that. That's basically the logic behind.

Thank you so much, guys.

Thank you, Marcelo. Next in line, we have Guilherme Rosito from Bank of America.

Guilherme, you there?

Yes. Thanks, Diego.

Good morning, everyone. Thank you for taking my question.

My first one is on Natureza, and I'm sorry to keep on that. Francisco, you mentioned that there are some considerations for the project, and as far as you can tell us, if we come in to have all the licenses, everything, what would weigh more for you not to go ahead with the project?

Since you seem very excited with the prospect and the economics of it, would it be the balance sheet? Would it be maybe we come to a third year without a capacity increase, and prices haven't been able to move past $600 for hardwood, and then we have this huge wave of capacity coming, maybe we think it's better to wait some time and put it in order?

Just trying to pick your brains in understanding what could eventually delay the approval of the project because I understand you're very excited on the economics, but just trying to understand what those considerations might be. The second to Guilherme, do you feel that this is the pulp price bottom for this cycle right now?

Are you feeling that after the recent decreases, intake has come back to normal, or are you feeling more appetite from buyers to feel like this is the bottom, or maybe we can expect another leg down before we actually reach the bottom of the cycle? Thank you.

I would say the first part of your question, can you hear me? Sorry.

Yes, I can hear you. Okay.

First part of your question, what could delay the project? I believe that we already answered that.

Sorry about that. In the sense that we have mentioned that we are in a process of monetization, we are in a process of licensing, and, of course, we will take the decision in a responsible way.

That my answer for that. We already mentioned that we have a target in net debt-to-EBITDA, and I can't be too precise what is the point.

We will not take any irresponsible decision. This is my answer.

Guilherme, I'll take your second question. It's very difficult to answer whether we reach the bottom or not.

I believe so. I believe that from here on, we have reasons to believe that the prices should start picking up.

One of the reasons I've already mentioned, which is the cost of wood chip in Asia that has quite relevant impact on the cost of production in China. A second one, we have seen several announcements of closures, planned and unplanned, definitive or temporary, mainly in the softwood side in North America, in Scandinavia, in Europe mainland.

We believe that's trending in the right direction. It's not yet sufficient to have a meaningful correction on the softwood supply-demand ratio.

We believe there is still way to go in terms of closures there. With the current prices of softwood, this trend will only continue.

Lastly, I would say the Q4 of the year is a very strong month in terms of demand. If you take historically, prices tend to go up during the last quarter of the month.

With all of those factors combined, it would lead me to believe that, yes, we have reached the bottom. We still have, let's say, a couple of weeks of August still that could potentially have a minor change downwards.

I believe that from here on, prices should start moving upwards.

Thank you so much, Francisco and Guilherme. Super clear.

Thank you, Guilherme. Now, next in line is Juraj Domic from LarrainVial.

Please bear in mind that to be able to answer all of your questions, if you have any additional question regarding Natureza, we can contact you later on this meeting so we can answer as most questions as possible, okay? Thank you.

Yurach, it's you. Hello.

Hello, good morning. You can hear me, right?

Yep.

Perfect. We observed an increase in production that was not followed by sales volumes in pulp.

I just wanted to confirm if this was related to the market seasonality that you mentioned earlier. One more question if the operations in southern Chile have continued normally with the recent rain events, either operations or shipments or logistics, any of the sort.

Thank you.

I think our stocks were very low, basically we have recovered a little bit our stocks so that we can serve our customers according to the level that we commit, no, and that is part of our characteristic as a good supplier. We are happy with our level of sales and our level of stocks now.

We were a bit low in stocks before, hm? Service level is very important in an industry like this.

Yes, our mills have continued to operate normal in the south of Chile and also in Brazil despite the difficult conditions. There's a bit of issues on the logistics going from the forest into the mill and from the mill into the ports, but nothing that interrupt the production.

Perfect. Thank you very much.

Thank you, Raimundo. Next in line, we have Alfonso Salazar from Scotiabank.

Alfonso?

Couple questions on my end. The first one is regarding what you mentioned about demand being okay globally.

Just wanted to hear what's going on in your thoughts on what's going on and the outlook for China and Europe. We understand that North America has been strong, but how do you see these two markets evolving over time?

Perhaps the concern with China is that we know that population is in a downtrend already, that many people will retire shortly in a very low pension. Is this increase in demand that you see for own consumption, is it going to be for the export markets, becoming more like a competitor in exporting paper?

The second question I have is regarding CapEx guidance. You mentioned that you will be more strict spending in the second half of the year.

Is there any change to your CapEx guidance for the year? Thank you.

Take the first one. I think China is a country that continued to develop.

We are present there very often, and we have people there, and myself, Guilherme, Francisco go there a couple of times a year. The country keeps developing, and the main driver for demand is middle class.

China expect to have a continue people joining middle class. They expect another 400 million people to join middle class in the next 10 years.

That is where the bigger demand for consumer products and paper products is coming. Then another driver for demand in the medium-term is what we call the de-integration.

In the world of pulp and paper, you have a huge amount of integrated pulp production in the US, in Canada, in Europe, and some of that is with very old assets, no, in the pulp part. We believe, and we are already seen some examples of companies who are deciding to stop their pulp mills and buy pulp from the market.

We believe that trend will probably continue, and that, again, that is a big opportunity. Then you also have the fiber-to-fiber substitution, no, which Guilherme mentioned, no.

Softwood is structurally complicated, no, oversupply, well, again, with a very high cost in the Northern Hemisphere, and some adjustment will happen there, no doubt, and also that provide an opportunity for hardwood that hardwood is very competitive in production with our current assets, and we expect also with Natureza. Those are the key things we believe will sustain the demand for our products.

Regarding your second question on CapEx guidance, no, we cannot disclose CapEx guidance, but what I can let you know is that we already showed the results of the first quarter CapEx versus the second one, and what I can convey is that you will keep on going seeing efficiencies throughout the next quarters.

Fair enough. Thank you.

Thank you, Sebastián and Raimundo. Now for the last question, we have Ricardo Monegaglia from Safra.

Ricardo?

Hello, guys. I think you can, right?

Yes, we can hear you.

Cool. Thank you for the opportunity.

I have a couple of quick questions. First one, just wanted to hear your thoughts on China forestry industry.

We are hearing a lot of discussions if the country could in fact increase the productivity of its forestries. We are hearing that the country is trying to get more investment on specific provinces to really become like a producer and maybe even exporter of wood and forestry.

Just wanted to hear your thoughts on that, what are the main challenges you think they will have by doing that? My second question on the leverage plan.

If you could just remind us what is on the table when you think on the leverage, what kinds of assets you think are in the table currently? I just as a complement, do you think that all of your pulp assets are required when you think on the whole structure of the pulp sector?

Like the outlook that is not ideal for high-cost producers, not saying that some of your operations are high-cost producers, but some of them are not huge as we are seeing currently and with Natureza as well. Broad question, but just wanted to hear you on that.

The first part regarding China forestry. We have done quite a lot of work over the last two years to have a deeper understanding of the Chinese forestry industry.

There's no doubt that they have grown eucalyptus plantations over the last 10, 15 years. They have been growing that.

What we hear in the ground is that they do have limited capacity to continue doing that given that the land, no, and how they dedicate the land to food, no, and to other uses. They could grow a bit more, but I think the number was something like 600,000 hectares of more growth.

Beyond that, it's difficult. No doubt that they have been using also the downturn in construction in the country to use that surplus wood, so that will probably continue for a few more years.

That is enough to supply what they have today and what they are building. We do not expect under any circumstances China to become an exporter of wood or an exporter of pulp.

We haven't heard their intention at all, no? There's no doubt that they do have a surplus of paper or installed paper capacity, yeah?

That is a problem, I would say, at the end of the day, and they, as a consequence of that, they have a difficulty increasing paper price, even though they have fantastic facilities, they produce great paper, but they have a difficulty increasing the paper prices in the local market, and they also export at relatively low prices. That is an issue and affects our own paper and other paper companies around the world.

We haven't yet seen a lot of, I would say, discipline on that, no, on producing less basically. Some signs of that, but not enough.

We believe that that will eventually happen, maybe some consolidation also within the Chinese paper industry. Maybe it might happen in the next few years.

You want to take the second question? You take the second question.

Ricardo, regarding what's on the table, I would say, as we have mentioned, it's mainly what you consider balance sheet, and we have been mentioning our forestry base. That is, I would say, what we have disclosed publicly, and I would like to stick to that.

All right. Thank you.

Okay. In that case, I believe that will be all.

Thank you everyone again for joining our second quarter 2026 earnings presentation. See you again next quarter.

Thank you very much for your question and for your participation. Bye-bye.